Service-Level Targets: One Size Doesn’t Fit All



Andrea Ayers
11/09/2009

Throughout my years managing call centers and global service operations, there has been ongoing debate over service-level targets. Some propose a "gold standard" in setting service level targets. However, recent research indicates that service levels must be established based on specific business needs and customer requirements for the call center:

  • What happens on the call is more important than wait time to reach an agent
  • An 80/20 service level is not a "gold standard" for delivering higher satisfaction in the call center
  • Over-investment in call center staffing to meet service levels is all too common

From these findings, a new set of rules for setting service levels is emerging.

Rule 1: Call handling is more important. Statistical analyses consistently reveals that the call center representative’s skills and first call resolution have much stronger impacts on satisfaction performance than does time spent in queue. This holds true even with self-reported perceptions of wait time in the call center. Across the board, customers whose issues were resolved have higher customer satisfaction scores—regardless of how long they waited. So when you are challenged to allocate budget to customer satisfaction improvements, consider placing wait time lower on the list than the above factors.

Rule 2: The 80/20 rule is no guarantee in the call center. Setting the service level to 80/20 does not guarantee a positive customer experience. For example, in the shipping industry we saw that queue times of up to a minute do not detrimentally affect customer satisfaction scores. In the insurance industry, our analyses showed no strong effect on customer satisfaction at wait times of up to two minutes. In the call center environment in financial services, we noted some cases where queue time did not affect customer satisfaction at all.

As a general statement, call center queue times of less than 30 seconds do not strongly impact the customer experience. What are the exceptions? Call center trends vary by customer segment and by wide variations in daily service level performance. In one group of centers where queue time varied substantially day by day, customers were highly sensitive to call center wait time; perhaps these daily changes resulted in widely varying customer expectations. Similarly, different call types or segments of customers have different sensitivity to speed of answer; customers phoning the call center with a technical problem are much more willing to wait in queue than are customers who need to verify their mailing address.

Rule 3: Over-investment in call center staffing is common. With increased pressures to meet customer satisfaction metrics, many call centers over-invest in staffing to achieve high service levels when the quantified return is difficult to pin down. Staffing a call center to reach an 80/20 service level inevitably involves labor costs beyond what is needed at non-peak call times. But if it is not important to the customer to answer the call in 10 or 20 seconds, why spend the money to staff to a peak call volume that may only occur a few times a day? It may be perfectly feasible to drop service level to a 70/30 or a 60/40 average call center speed of answer, without negatively impacting customer satisfaction scores. We know cost savings in these decisions can be substantial.

The first step in setting service level targets should be to conduct calibration analyses for each major call type or customer segment. This is particularly true if the goal is to implement a prioritized queuing strategy in the call center. When you understand how different wait times affect customer satisfaction scores, you are in a position to make objective, educated changes to service levels.

Key call center observations:

  • Service level targets should be based, in part, on analysis of customer expectations.
  • Call center queue time generally has a small relationship on the experience except at higher than "normal" queue lengths.
  • Customer satisfaction with the call center representative and first call center resolution are both stronger drivers than queue time.
  • Sensitivity to call queue time differs by industry and customer type.
  • Where call center queue times are less controlled, they may have stronger effects on satisfaction.
  • In many cases, loosening service level targets can significantly reduce labor costs without negatively impacting satisfaction or abandonment rates in the call center.

By deploying service level sensitivity analysis, call center management can strike the right balance between loyal customers and optimized costs—and find the right size fit for their customer service operation.

First published on Call Center IQ.